Democrats Open Arms to Budget, With Caveats

Congressional Democrats praised the budget as bold and honest, but fault lines began to show on some provisions related to taxes, agriculture, energy and education.

CARL HULSE and DAVID M. HERSZENHORN

WASHINGTON — For years, Congressional Democrats tried to avoid anything that would let Republicans slap the tax-and-spend label on them. But on Friday, they cautiously embraced President Obama’s budget, with its ambitious blend of new spending and tax increases, calculating that they could turn the old attack line to their benefit.

As they began to digest the administration’s fiscal blueprint, even Democrats with reservations hailed it as a long-overdue example of honesty in federal budgeting after years of what Senator Ben Nelson, Democrat of Nebraska, called “fudgeting.”

Several said they saw the tax increases as reasonable ones that could be sold to the public in difficult economic times, especially since middle-class taxes would be cut under the president’s plan.

“The American people have been denied the truth for many years,” said Representative Jim Cooper, a Tennessee Democrat who has long warned of the dangers of rising deficits. “They are willing to take their medicine if it leads to a strong country.”

Yet even as Democrats praised what they described as the bold, broad strokes of the spending plan, fault lines began to show on important provisions regarding taxes, agriculture, energy and education, making it clear some elements would be revised or jettisoned as the proposal makes its way through Congress over the next two months.

Senator Kent Conrad, Democrat of North Dakota and chairman of the Budget Committee, said Mr. Obama’s call to raise federal dollars by limiting income tax deductions for families earning above $250,000 might have to be rethought. “That may be a bridge too far,” Mr. Conrad said.

Other lawmakers and some advocacy groups warned that the limits could cut donations to already struggling charities by reducing the value of deductions for contributions from donors in the upper tax brackets.

While most Americans would get a slight tax cut under Mr. Obama’s plan, the budget would also allow Bush-era tax breaks for the wealthy to expire. Some Democrats said they were uneasy about that as the country struggled to end a recession.

“I am certain that it is going to be very difficult and doesn’t work to be raising taxes in a time when we are experiencing major adjustments in our economy,” Senator Nelson said.

Administration officials emphasized their push to halve the deficit in Mr. Obama’s first term and noted that the central tax increases would not take effect for two years, when a rebound of the economy is expected to be under way. Some Democrats said that seemed acceptable when balanced against the tax cuts for the middle class.

“The increases in most cases, as I see it, restore the tax burden that existed in 2000,” said Senator Byron L. Dorgan, Democrat of North Dakota. “And it seems a perfectly reasonable thing to do.”

Representative Steve Cohen, another Tennessee Democrat, said: “People want to see equity and fairness. You have to have some taxes to balance the budget. You can’t have all the services that are required — defense, energy, education, health care — and not have taxes.”

Leaders of the Blue Dog Coalition, a group of House Democrats who push against deficit spending, called the budget “a good starting point” and indicated they would argue for deficit reduction, a position shared by Mr. Conrad.

“Cutting the deficit in half in the first five years is the right order of magnitude,” Mr. Conrad said. “The investments in reducing our dependence on foreign energy, excellence in education and health care reform are right on target in terms of priorities.”

But while there was general support among Democrats for the broad outlines, specific provisions are already dividing the party, in some cases exposing longstanding policy rifts that tend to cut along geographic rather than party lines.

Mr. Conrad said he was troubled by a proposal that would eliminate so-called direct payment farm subsidies for producers with more than $250,000 in revenues. (A threshold of $500,000 in revenues, widely reported earlier, was an incorrect figure given in the printed version of the president’s budget summary.) The current cap on eligibility is $750,000 in farm income; Mr. Obama’s plan could end subsidies for farmers who have high revenues but no income after expenses.

But Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, said he was pleased that Mr. Obama was moving to curtail a subsidy program Mr. Harkin had long opposed. “I have never been a fan of direct payments,” the senator said.

To some, the debate was reminiscent of 1993, when President Bill Clinton narrowly forced through a five-year economic plan that raised taxes, limited military spending and funneled money to favored Democratic initiatives.

Republicans stood united in their opposition and ended up wresting control of Congress from the Democrats in 1994.

But Democrats and others say the comparison is flawed because there was no economic crisis when Mr. Clinton increased gas taxes and raised income tax rates on affluent Americans. In addition, Congressional Democrats were unraveling in 1993, while in the November election, the party increased its majority in both chambers.

Republicans, while raising objections to the budget plan, did credit the White House for a bold proposal that laid down a clear ideological marker. “They are really swinging for the fences,” said Senator John Thune, Republican of South Dakota.

Mr. Cooper said the budget was a provocative plan that could spur needed debate in Congress about just what the government pays for and how it pays for it. “We have an opportunity to find federal programs that are wasteful and eliminate them,” he said. “I am ready to do that in programs big and small.”

Representative Charlie Melancon, a Blue Dog Democrat from south Louisiana, said he had already begun explaining to wealthy constituents that the looming tax increases represented a rebalancing after President George W. Bush’s tax cuts.

“Why do they want to tax the rich?” he said, quoting some of his well-off constituents who benefited from the Bush tax cuts. “I said because they gave you all your money back for a couple of years.”

Mr. Melancon said he believed that honest budgeting would eventually lead to fiscal responsibility. “It’s not going to be a fun period in my life nor anyone else that’s in the Congress,” he said. “But we must do these things to reform the spending habits of the federal government.”

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